| ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS) | ||
| END SEMESTER EXAMINATION – SEPT/OCT. 2015 | ||
| B.COM (T.T.) – V SEMESTER | ||
| C2 12 503: PRINCIPLES & PRACTICE OF BANKING AND INSURANCE | ||
| Duration: 3 Hours Max. Marks: 100 | ||
| SECTION – A | ||
| I) | Answer ALL the questions. Each carries 2 marks. (10×2=20) | |
| 1. | Give the definition of banking. | |
| 2. | What do you mean by unsecured loans? | |
| 3. | Explain insurable interest. | |
| 4. | Who is a ceding company? | |
| 5. | Elucidate on Non-Performing asset. | |
| 6. | Define Negotiable instrument. | |
| 7. | What do you mean by material alteration? | |
| 8. | Who is a collecting banker? | |
| 9. | Explain RTGS. | |
| 10. | Name two life insurance companies. | |
| SECTION – B | ||
| II) | Answer any FOUR questions. Each carries 5 marks. (4×5=20) | |
| 11. | The underwriting guidelines differ for each insurance company, but the process is essentially the same for each of them. Outline the steps of underwriting process. | |
| 12. | What are the different types of cheques? | |
| 13. | Explain any five functions of a commercial bank. | |
| 14. | Who is an insurance agent? Explain the different types of agents. | |
| 15. | Differentiate between double insurance and reinsurance. | |
| 16. | Throw light on the parties to a negotiable instrument. | |
| SECTION – C | ||
| III) | Answer any THREE questions. Each carries 15 marks. (3×15=45) | |
| 17. | Explain in detail the different modes of banks creating a charge? | |
| 18. | “Supported by the latest technology, banks are working to identify new business niches, to develop customized services, to implement innovative strategies and to capture new market opportunities.” Explain the recent trends in banking sector. | |
| 19. | “The main objective of every insurance contract is to give financial security and protection to the insured from any future uncertainties. Insured must never ever try to misuse this safe financial cover.” You as a insurer what are the principles of insurance you would explain to your client?
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| 20. | Achieving price stability has remained the dominant objective of monetary policy of Reserve Bank of India. Explain the tools adopted by the RBI to achieve this objective? | |
| 21. | Explain the following:
a) Essential Characteristics of Negotiable instruments (10 marks) b) Types of Crossing a Cheque. (5 marks) |
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SECTION – D |
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| IV) | Case Study (1×15=15) | |
| 22. | SAFEKEEPING CHEQUES
A small business owner, Mr. Danny , kept his business chequebook in a locked cabinet behind a counter at his office. He was the only person who had access to the cabinet.
One day, Mr. Danny’s bank phoned to ask for instructions in cashing a 900,000 Rupees cheque, as doing so would generate an overdraft in the account. Confused, Mr. Danny explained to the bank that he never wrote such a cheque. Mr. Danny then looked in his cabinet and realized that some cheques were missing. Suspecting a fraud, he contacted his bank as well as the police, who later arrested an employee of Mr. Danny’s.
It was after the employee was arrested that Mr. Danny discovered another earlier cheque for Rupees 2,01,500 had been fraudulently written, and in that instance the bank had cashed the cheque. Mr. Danny requested the bank compensate him for the full amount but was turned down. The bank was of the opinion that Mr. Danny had inadequately protected his cheques and was therefore liable for his employee’s fraudulent activity. Unhappy with the bank’s response, Mr. Danny complained to the police and filed a case against the bank.
Complaint upheld
However, the bank believed that Mr. Danny failed in his obligations to take reasonable measures to prevent cheques from misuse, as specified in his account agreement.
The Police interviewed Mr. Danny as well as a number of representatives from the bank. It was concluded the client did take reasonable measures to safeguard his cheques. They were kept in a discrete locked cabinet and there were no prior indications the cabinet had been compromised.
Mr. Danny had immediately informed the bank of the suspicious transactions when he became aware of them, as he was required to do. In addition, the account agreement did not contain provisions preventing compensation in the event an employee was involved in the fraudulent activity that caused a loss. In this instance, it was felt that Mr. Danny could not be held responsible for the fraudulent cheque. The bank agreed to compensate Mr. Danny the full Rs. 2, 01,500.
a) What are the precautions a paying banker should take before passing or dishonoring a cheque? b) What are the statutory protections the paying banker can avail? c) Mention the circumstances under which a cheque can be dishonored. |
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